Price to book ratio

What is the Price to book ratio?

The Price to book ratio is the result of dividing the current market share price by Book value per share.

Formula:

Price per share / Book Value per Share

What does Price to book ratio mean?

The Price to book ratio shows how much value is in the company relative to the share price. Book value is the sum of all the company parts if it were to be liquidated today. A lower Price to book ratio may mean a company is undervalued because it’s trading for less than what it’s worth fully liquidated.